23.6.22.Mcafee v LifeStance.Complaint.pdf

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Jason P. Hoelscher (Arizona Bar No. 027580)
1
Sico Hoelscher Harris, LLP
2
802 N. Carancahua Street, Ste 900
3
Corpus Christi, Texas 78401
4
Telephone: (361) 653-3300
5
teamhoelscher@shhlaw.com
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7
Kevin K. Ross-Andino (pro hac vice forthcoming)
8
éclat Law PA
9
307 Cranes Roost Blvd., Suite 2010
10
Altamonte Springs, Florida 32701
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Telephone: (407) 636-7004
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Kevin.Ross@eclatlaw.com
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jfalto@eclatlaw.com
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15
Attorneys for the Lead Plaintiffs and the Classes
16
17
18
IN THE UNITED STATES DISTRICT COURT
19
DISTRICT OF ARIZONA
20
21
JESSICA MCAFEE, LISA MILLER,
HANNA NAUDE, ANGELA
CHARLTON, CHERYL MITCHELL,
H.L. SMITH, DENISE TRENT, LYDIA
POTOMA, and JACQUELINE SILVA,
individually and on behalf of others
similarly situated,
Plaintiffs,
v
LIFESTANCE HEALTH GROUP, INC.,
a Delaware corporation,
Defendant.
Case No: _____________________
COLLECTIVE AND CLASS
ACTION COMPLAINT
JURY TRIAL DEMANDED
22
Case 2:23-cv-01144-DJH Document 1 Filed 06/22/23 Page 1 of 47

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The above-named individual plaintiffs bring this collective and class action
1
lawsuit (individually and on behalf of others similarly situated) against LifeStance
2
Health Group, Inc., (“LifeStance”), and allege, upon personal information and
3
knowledge as to their own actions, their counsel’s investigation and upon
4
information and good faith belief as to all other matters, the following:
5
I. NATURE OF THIS ACTION
6
1. Lead Plaintiffs, individually and on behalf of others similarly situated,
7
file this action due to LifeStance’s pattern and practice of (i) refusing to pay them
8
wages lawfully and professionally earned in performing their job responsibilities;
9
(ii) ostracizing and condemning them for expressing their opinions about their
10
compensation, the “advance” LifeStance contrived for each new Clinician, or
11
anything having to do with patient billing; and (iii) seeking to recoup wages lawfully
12
earned by them under the guise of “an advance” despite the fact that this scheme to
13
recoup wages constitutes a violation of the Thirteenth Amendment to the United
14
States Constitution.
15
2. LifeStance’s vulturine business practices are systematically deployed
16
(without exception) throughout its entire network of facilities in the United States,
17
directly impacting the Lead Plaintiffs and all others similarly situated in the same
18
manner.
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II. JURISDICTION AND VENUE
1
3. This Court has original subject matter jurisdiction pursuant to 28 U.S.C.
2
§ 1331 because all three claims alleged herein are based on a federal statute, and thus
3
involve a federal question.
4
4. This Court equally has original subject matter jurisdiction based on the
5
Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2) because this is a class
6
action where any member of a class of plaintiffs is a citizen of a state different from
7
the defendant and the aggregated amount in controversy exceeds five million dollars,
8
exclusive of interest and costs.
9
5. This Court has supplemental jurisdiction concerning the claim in Count
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III - the Federal Declaration Act, 28 U.S.C. §2201(a) - pursuant to 28 U.S.C. §
11
1367(a).
12
6. Venue is proper based on 28 U.S.C. § 1391 because the acts giving rise
13
to the issues involved in this lawsuit occurred within the boundaries of this District,
14
including without limitation the fact that LifeStance maintains its principal place of
15
business within the boundaries of this District.
16
III. PARTIES
17
7. LifeStance is a publicly traded Delaware corporation that maintains its
18
principal place of business in Scottsdale, Arizona, but does business in over thirty
19
states across the nation.
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8. Lead Plaintiffs (and the other individuals that would ultimately
1
comprise the collective and class members) are currently, or were at one time,
2
nonphysician employees of LifeStance classified as a “Clinician,” a term used by
3
LifeStance to identify nonexempt, W2 employees who provide mental health clinical
4
treatment or therapy to children, adolescents, and adults suffering from a variety of
5
mental health issues.
6
9. Lead Plaintiffs consent to the filing of this action; a copy of their
7
consents is attached as Composite Exhibit 1.
8
IV. SUBSTANTIVE FACTS APPLICABLE TO ALL CLAIMS
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A. Overview of LifeStance and its Business.
10
10. LifeStance boasts of being the nation’s largest mental healthcare
11
company focused on providing evidence-based, medically driven treatment services
12
for children, adolescents, and adults suffering from a variety of mental health issues
13
in an outpatient care setting, both in-person and through its digital health
14
telemedicine alternative.
15
11. LifeStance likewise portrays itself as the largest provider of virtual and
16
in-person outpatient mental healthcare for children, adolescents, and adults
17
experiencing a variety of mental health conditions including depression, anxiety
18
disorder, schizophrenia, and post-traumatic stress disorder.
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12. LifeStance boasts about its commitment to state-of-the-art clinical
1
excellence, its partnership and collaboration with other treating health care providers
2
to ensure continuity of care, its utilization of data to individually tailor services for
3
continual improvement in outcomes, and its focus on empowering patients to make
4
informed choices to help them achieve their goals.
5
6
13. According to its public filings with the United States Securities and
7
Exchange Commission (the “SEC”), LifeStance broadcasts:
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1
2
3
14. Virtually all LifeStance’s revenue is generated by its Clinicians, which
4
means LifeStance’s business would collapse if it did not have Clinicians to service
5
its patients.
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1
15. This fundamental dependence on Clinicians puts pressure on senior
2
management to focus on increasing the number of Clinicians it employs, retaining
3
these individuals, and rigorously increasing the number of daily patient encounters
4
per Clinician to enable LifeStance to achieve its revenue projections; LifeStance’s
5
inability to execute this critical business objective could result in its demise as a
6
going concern.
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8
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10
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B. LifeStance’s Initial Public Offering and Growth Strategy.
1
16. On February 16, 2021, LifeStance filed a Registration Statement on
2
Form S-1 with the SEC, which, after several amendments made in response to
3
comments from the SEC, would later be utilized for the initial public offering of its
4
stock to be traded on the NASDQ™ stock exchange under the ticker symbol LFST.
5
17. LifeStance initiated a growth strategy, in anticipation of its public
6
offering, to radically increase the number of Clinicians (nationwide) it employs to
7
embellish its gross revenues numbers to support its representations in its initial
8
public offering documents to induce investment as alleged in the securities class
9
action lawsuit pending in the United States District Court for the Southern District
10
of New York, a case styled – Nizar S. Nayani et al vs. LifeStance Health Group, Inc.
11
et al., Case No. 1:22-cv-06833 (SDNY 2022).
12
18. The characteristic of LifeStance’s growth strategy was its cavalier
13
undertaking to radically increase the number of Clinicians (nationwide) by
14
desperately acquiring existing psychiatric practices, and opening numerous new
15
facilities, throughout the United States while carelessly placing Clinicians in these
16
facilities knowing that it did not have sustainable patient numbers and operational
17
resources to support this ill-conceived growth strategy.
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19. While LifeStance’s duplicitous growth strategy temporarily boosted its
1
stock value, this anarchic strategy has ultimately become a cataclysm afflicting its
2
employees and its ability to live up to its lofty and unrealistic growth projections,
3
which is evidenced by the fact that LifeStance’s stock value has plummeted over
4
sixty percent since its initial public offering.
5
C. Outbreak of Clinician Resignations.
6
20. LifeStance experienced a disturbing surge in Clinician resignations
7
during the period leading up to its initial public offering and has since experienced
8
a steady flow of Clinician resignations because it eschews modifying or correcting
9
its foreboding and dysfunctional business practices, especially as it relates to
10
compensating Clinicians1
.
11
21. This outbreak of Clinician resignations was and continues to be
12
attributable to:
13
a. Hopelessness, despair, and distrust about their compensation,
14
especially considering the promises (or misrepresentations) made by
15
LifeStance during the recruitment and hiring process about the
16
1
It was generally known that the increase in Clinician resignations before the initial
public offering was a frequent topic of discussion in meetings held among senior
LifeStance managers, including meetings attended by LifeStance’s regional
presidents, regional clinical and medical directors, and senior clinical and medical
directors, as well as meetings attended by LifeStance’s chief growth officer, chief
medical officer, and senior clinical and medical directors.

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“significant” compensation each person could expect to receive as a
1
LifeStance employee.
2
b. Dejection due to delays in receiving the network provider
3
credentials necessary to bill for the Clinician’s services, which
4
significantly impacts the Clinician’s ability to deliver clinical services to
5
patients and earn an income.
6
c. Appallingly deficient operational resources (IT support, practice
7
management resources, billing staff and support, office staff,
8
knowledgeable individuals to assist patients with insurance questions,
9
scheduling staff and other similar resources, and so forth), essential to
10
enable Clinicians to effectively deliver clinical services to their patients.
11
d. A prominent lack of patients, despite representations by
12
LifeStance to the contrary, coupled with Clinician overstaffing at various
13
facilities with more Clinicians than patients available to keep each
14
Clinician fully engaged and profitable.
15
e. Distressing business practices concerning its ethics with balance
16
billing, underbilling, billing errors, collections, deficiencies in the
17
administration of all patient insurance approvals and post visit billings,
18
audits and investigations related to the way LifeStance managed its
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billings, among other significant administrative dysfunction that
1
LifeStance attempted to control as its senior management made a mad dash
2
to expand the corporation’s revenue base leading up to the initial public
3
offering.
4
D. LifeStance’s Subterfuge to Lure Clinicians into Accepting
5
Employment with the Company.
6
22. Evidence will show that LifeStance engaged in a deliberate and planned
7
subterfuge to lure prospective employees (Clinicians) into accepting employment
8
with the company.
9
23. The first phase of this subterfuge is to deliberately deceive the person
10
by selling them on the competitively high compensation package LifeStance offers
11
to Clinicians, consistently advertising and telling prospects that the person will earn
12
between $185,000 and $250,000, along with other perquisites detailed on its website
13
and in job postings, and discussions with the human resources individuals
14
responsible for recruiting Clinicians.
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1
24. Based on the representations made on its website and other promotion
2
and recruiting materials there is no doubt that LifeStance sets the expectation that a
3
new Clinician would receive a salary – and not a loan against future earnings – which
4
would range between $185,000 and $245,000.2
5
25. In addition to LifeStance’s representations in its recruiting initiatives,
6
it is noteworthy to likewise consider the representations it makes in its public filings
7
with the SEC, including its annual report for fiscal year 2022:
8
2
Job positions in Cities such as New York, Chicago and various other metropolitan
areas show a range of $185,000 to $300,000 for the starting salary. Social workers,
who are also treated as Clinicians by LifeStance have a general range of $60,000 to
$120,000 for their “salary,” but with the same payment metrics as the nurse
practitioners and other nonphysician Clinicians, thus subjecting them to the very
same scheme.

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1
26. LifeStance’s proclamation in its 2022 10-K filing about the
2
“competitive compensation package it offers clinicians is very telling in that
3
LifeStance boasts that its “clinicians are employed as W-2 employees. . . rather than
4
independent contractors, the latter of which we believe is more common in the
5
mental healthcare industry in the United States.”
6
27. This material representation, or some may argue misrepresentation, is
7
critical to the issue of Clinician compensation in this Action. On the one hand,
8
LifeStance boasts of treating its Clinicians as employees, paying them competitive
9
compensation packages, higher salaries, and the like, while at the same time taking
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advantage of a payment scheme that is more like an independent contractor minus
1
the aspects of such a relationship that would prevent it from becoming a form of
2
indentured slavery.
3
28. The second phase of this subterfuge is to systematically conceal
4
LifeStance’s plot to treat all wages paid during the first six to twelve months of the
5
Clinician’s employment as a loan disguised as an advance that LifeStance expected
6
the Clinician to repay if the person failed to satisfy LifeStance’s circuitous
7
performance metrics; this obligation to repay wages follows the employee if the
8
person leaves the company before LifeStance can recapture the money from the
9
employee’s wages plus an exorbitant rate of interest.
10
29. Neither LifeStance’s job postings nor its public disclosure in filings
11
with the SEC make mention of the “advance” or the fact that a Clinician is expected
12
to repay his/her salary if the employee fails to satisfy LifeStance’s circuitous
13
performance metrics, and it certainly makes no mention of the fact that the advance
14
would be treated as a loan that the person is expected to repay in full if the person
15
leaves the company before LifeStance can reclaim the full amount of its
16
investment/advance from the employee.
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30. The prospective employee (Clinician) thus accepts employment with
1
LifeStance under the delusion of earning a competitive salary when in fact the
2
employee is signing up to become an indentured servant3
.
3
31. Another aspect of LifeStance’s subterfuge is the delays and
4
complications the person faces to obtain network provider credentials necessary to
5
achieve LifeStance’s mercurial performance objectives.
6
32. It is fair to conclude that LifeStance was not only aware of the barriers,
7
delays and complications associated by the credentialing process, but it also
8
deliberately concealed them as part of its Machiavellian compensation scheme
9
codenamed “an advance” – which was contrived to preserve its ability to reclaim
10
any wages paid to the Clinicians at the whim of LifeStance’s senior management
11
because LifeStance knew that it would not recognize profit from employing these
12
newly hired Clinicians for several months; LifeStance basically passes its overhead
13
associated with the employee onto the employee to bare the risk of accepting
14
employment.
15
3
Indentured servitude is a form of labor where an individual is under contract to
work without a salary to repay an indenture or loan within a certain timeframe. In
this instance, the indentured servitude was the first full year of compensation and
would last until the person repaid the indenture in full (including all interest), with
the expectation and obligation that the indenture would be paid even if the
servant/Clinician leaves the company. The 13th Amendment to the United States
Constitution, however, made indentured servitude illegal in the United States and it
is banned in nearly all countries.

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33. Another distressing aspect of LifeStance’s subterfuge relates to its
1
abuse of its leverage (discussed below) to force resigning Clinicians to give thirty to
2
sixty days advance notice of the person’s intent to terminate his/her employment,
3
often discarding the person earlier once LifeStance can make patient adjustments.
4
34. LifeStance strategically exploits this notice period to reassign the
5
Clinician’s patients to another therapist, while simultaneously taking steps to
6
attenuate the Clinician’s ability to earn an income during the notice period; in most
7
if not all instances, Clinicians receive little to no income during these pay periods.
8
E. LifeStance’s Refusal to Pay Clinicians the Full Amount of
9
Compensation Earned, Along With its Refusal to Disclose Information About
10
its Employer Generated Debt and the Employee’s Financial Performance
11
Metrics Necessary to Determine Gross Wages.
12
35. LifeStance systematically refuses to pay Clinicians the person’s full
13
percentage of the service billing codes billed to insurance as specifically promised
14
during the recruitment process and stated in LifeStance’s corporate policies,
15
contractual agreements, and elsewhere in its business records4
.
16
36. LifeStance does not share any information with Clinicians about the
17
metrics or data used to calculate their gross compensation or corresponding
18
deductions from the “advance” each pay period.
19
4
LifeStance is obligated to compensate Clinicians between fifty and sixty percent
of the gross amounts billed to insurance providers related to the Clinician’s treatment
and service to LifeStance patients.

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37. The employee’s pay stub merely states a “gross number”, and provides
1
minimal details about tax, insurance, and other standard deductions, but provides no
2
information on how the gross wage number was determined, whether the number
3
was an advance or actual wages, and the pay stub provides no details explaining
4
deductions related to the “advance.”
5
38. Clinicians have habitually complained about this issue to LifeStance’s
6
human resources personnel and management, but LifeStance rebuffs them and holds
7
to the notion that the corporation is not obligated to share this information or any of
8
the metrics it uses to determine the amount it arbitrarily pays to Clinicians each pay
9
period.
10
39. As a result of LifeStance’s unfair and deceptive business practices,
11
Clinicians are unable to earn patient billing fees sufficient to offset the
12
insurmountable debt obligation spawned from these “advances” due primarily to
13
LifeStance’s mishandling of its operations, its plot to use this debt to create
14
indentured servitude, its goal of placing obstacles that stifle a Clinician’s ability to
15
satisfy LifeStance’s circuitous metrics for compensating them, and providing the
16
leverage LifeStance needs to control the Clinician’s behavior through imposing
17
financial stress upon them.
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40. The fees a Clinician earns from rendering patient services are
1
inhumanely constrained (to the extent these individuals receive any compensation),
2
resulting in the stockpiling of unbearable and insurmountable levels of debt that
3
must, in the absence of earned fees, be repaid.
4
41. Preliminary investigation into these issues reveals that the range of debt
5
Clinicians have and are likely to incur ranges between $10,000 and $50,000,
6
depending on the length of time the person worked for LifeStance.
7
F. LifeStance’s Ruthless Use of Employer Generated Debt to Impose
8
Indentured Servitude to Leverage and Supplement its Failing Financial
9
Performance.
10
42. LifeStance’s indentured servitude is so ruthless that the company
11
routinely pays an advance to the Clinician in instances where the Clinician
12
specifically requests that LifeStance cease making the advance to avoid getting
13
further into debt.
14
43. LifeStance’s indentured servitude includes a ploy to use the
15
insurmountable obligation as leverage to hold the employee hostage until LifeStance
16
can replace the employee once the Clinician gives LifeStance notice of the person’s
17
decision to terminate her/his employment.
18
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44. LifeStance likewise uses the insurmountable obligation as leverage to
1
cajole employees into remaining with the company (at a much lower salary) under
2
the premise that LifeStance would excuse a portion of the debt while the Clinician
3
“works off” the balance.
4
45. The Federal Consumer Financial Protection Bureau (CFPB) has
5
launched an inquiry into practices and financial products that may leave employees
6
indebted to their employers, based on the concept of “employer generated debt,”
7
which is akin to indentured servitude abolished by the Thirteenth Amendment to the
8
United States Constitution.
9
46. There is a growing concern that these purported debt obligations are not
10
only unfair, and unconstitutional, they are a gross injustice to Americans and a
11
dereliction of public policy.
12
47. For example, workers may not understand that these arrangements
13
involve an extension of credit, and they may not know whether they have the ability
14
to comparison shop for credit offered by others or whether entering into the debt
15
agreement is a condition of employment.
16
48. Another major policy concern is whether the worker understands
17
whether the status of the debt may impact a decision to seek alternative employment.
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49. These potential risks might limit competition in the labor market and in
1
the market for similar consumer financial products and services that would not turn
2
the person into an indentured servant of her or his employer.
3
50. Total household debt in the United States rose by $148 billion, or
4
0.9 percent, to $17.05 trillion in the first quarter of 2023, according to the
5
latest Quarterly Report on Household Debt and Credit.
6
51. Mortgage balances climbed by $121 billion and stood at $12.04 trillion
7
at the end of March 2023. Auto loan and student loan balances also increased to
8
$1.56 trillion and $1.60 trillion, respectively, but credit card balances were flat at
9
$986 billion, according to the Federal Reserve.
10
52. With average consumer debt in America on the rise, it’s no surprise that
11
debt delinquency – missed payments of 30 days or more – has increased for nearly
12
all debt types.
13
53. Even with that $16.9 trillion shared by about 340 million people,
14
consumer debt statistics show that Americans are feeling the pain.
15
54. There is little debate in the United States that consumer debt is a major
16
source of trauma on Americans, with debt being one of the most significant
17
contributing factors to the decline of mental, emotional, and physical health in
18
American over the past two decades, including being the leading cause of the rise in
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the destruction of American families through divorce, suicide, and other dreadful
1
life events.
2
55. While some Americans may have the pleasure of taking a job to fulfill
3
a career expectation or dream, there is little debate that most if not all American’s
4
take jobs to support their families, loved ones, and of course themselves.
5
56. Both federal and state governments have enacted many laws to protect
6
employees from the abusive and often predatory business practices and tactics some
7
employers execute in their effort to control hard working Americans, often
8
attempting to convert them into slaves to service solely the interests of their master.
9
57. Because slavery was abolished, and government in the United States
10
takes steps to foreclose abusive employment practices, Americans can take
11
employment with the understanding that the person will be able to lawfully earn a
12
wage to support their families and loved ones, including servicing the tremendous
13
debt obligations that Americans are facing these days.
14
58. Thus, the notion that an American can become an indentured servant
15
merely by accepting employment is absurd, its unlawful and unconstitutional, and
16
thus LifeStance’s efforts to impose indentured servitude on its employees must be
17
stopped.
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V. COLLECTIVE ACTION ALLEGATIONS
1
59. Lead Plaintiffs (and all putative members of the collective action) were
2
(and some continue to be) nonexempt psychiatric and mental health nurse
3
practitioners and other nonphysician employees of LifeStance (called “Clinicians”
4
as defined above) who provided mental health clinical services to LifeStance
5
patients within the United States at any time from January 2020 to the entry of
6
judgment in this case (the “Collective Period”) and who:
7
a. Did not receive any compensation from LifeStance, during the
8
individual’s employment, for a minimum of at least one week, with many
9
not receiving compensation for as much as twelve weeks.
10
b. Did not receive all compensation due them, to the extent the
11
individual was paid, consistent with LifeStance’s obligation to compensate
12
them a percentage of all services billed to patients, insurance companies,
13
and others.
14
c. Paid some portion or all the specious debt obligation conceived
15
solely by LifeStance for its own benefit as a condition of the employee’s
16
employment.
17
d. Who had deductions from their wages for a debt and other
18
obligations that were never disclosed or explained to them.
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60. Clinicians were nonexempt employees for the applicable periods and
1
were issued W2s by LifeStance.
2
61. Clinicians routinely worked forty and more hours per week several
3
times a month while employed by LifeStance.
4
62. Clinicians routinely received compensation at a rate of less than $450
5
per week for at least one week and as much as twelve weeks, with most having a pay
6
period in which the employee did not receive any compensation for an entire month.
7
63. LifeStance’s ruthless business practices of creating indentured
8
servitude vis-à-vis the advance, effectively eradicated the notion that Clinicians
9
received any wages during the first six to twelve months of employment, since these
10
funds were in treated as a loan by LifeStance that the employee must repay without
11
exception.
12
64. Therefore, since the advances were a “loan” and not wages (according
13
to LifeStance) then the Clinician did not actually receive any wages during their first
14
six to twelve months of employment, and in fact, the Clinician would not receive
15
any wages until such time as the person generated enough fee income to repay its
16
indenture to LifeStance and could receive compensation free and clear of any
17
repayment expectation.
18
65. LifeStance’s unlawful compensation practices violate the Fair Labor
19
Standards Act, 29 U.S.C. §§ 206, 207, 215 (the “FLSA”), which obligates LifeStance
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to pay nonexempt employees, including overtime and minimum wages, for all hours
1
worked.
2
66. Pursuant to the FLSA, Lead Plaintiffs, and all others similarly situated,
3
seek to prosecute their claims as a collective action on behalf of all current and
4
former Clinicians during the applicable statutory period who were not compensated
5
appropriately for all hours worked.
6
67. A collective action is appropriate in this circumstance because the
7
collective action members are similarly situated in that:
8
a. They were all subjected to LifeStance’s ruthless and systematic
9
unlawful compensation practices that deprived them of earning at least the
10
federal minimum wage for all hours worked, failing to pay them overtime
11
wages when appropriate, or both.
12
b. Each was to be paid on the same pay scale and formula, making
13
the problems alleged herein the same for any person that was or is a Clinician.
14
c. They were victims of LifeStance’s ruthless and predatory scheme
15
to not pay its employees all wages earned, and to use the employee’s wages
16
as an asset on its balance sheet to impress its investors.
17
d. They were forced to endure LifeStance’s predatory, systematic,
18
and retaliatory behavior that denied them compensation, imposed illegally
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fabricated debt upon them, forced termination of employment (i.e.,
1
constructive termination), and which in almost every case caused the person
2
to suffer emotional, psychological, and often physical harm.
3
e. LifeStance engaged in other dishonest conduct described above
4
and later in this pleading, including, but not limited to, forcing indentured
5
servitude vis-à-vis the unlawful and unconstitutional Clinician employment
6
agreement that LifeStance required each of these individuals to sign as a
7
condition of employment and continued employment.
8
68. Lead Plaintiffs, and all others similarly situated, are seeking statutory
9
liquidated damages as provided by federal law for LifeStance’s systematic, ruthless,
10
and predatory failure to pay wages as required by the FLSA, among other things.
11
69. The class of similarly situated individuals or potential collective
12
members sought to be certified pursuant to the FLSA is defined as a person who was
13
or is a Clinician during the Collective Period that suffered from the issues outlined
14
in Paragraphs 21 through 58 above (among other issues outlined throughout this
15
pleadings).
16
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70. Based on preliminary investigation, members of the collective class can
1
be placed into three separate subclasses:
2
a. Individuals classified by LifeStance as a licensed therapist
3
or psychologist.
4
b. Individuals classified by LifeStance as a licensed
5
psychiatric nurse practitioner.
6
c. Individuals classified by LifeStance as a licensed clinical
7
social worker.
8
71. The precise size and identity of the entire group of individuals
9
comprising the collective action class members is ascertainable from LifeStance’s
10
business records, tax records, and/or employee personnel records, including its
11
website (https://lifestance.com) and those of its affiliated treatment facilities, which
12
provides the name of all Clinicians purportedly “currently employed” by LifeStance,
13
and contains information about person who were Clinicians and their historical
14
employment data.
15
72. LifeStance compensated the collective action members in the same
16
manner and under the same unlawful employee compensation program, and each of
17
them has worked in the United States during the Collective Period.
18

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73. Lead Plaintiffs maintain the right to modify the collective action
1
member definition and/or to create additional subclasses or classes, if necessary, and
2
to revise these definitions to maintain cohesive classes which do not require
3
individual inquiry to determine liability.
4
VI. CLASS ACTION ALLEGATIONS
5
74. Lead Plaintiffs (and all putative members of the Class Action) were
6
(and some continue to be) “Clinicians”, as defined above, at any time from January
7
2020 to the entry of judgment in this case (the “Class Period”) and who suffered
8
financial harm during the Class Period that suffered from the issues outlined in
9
Paragraphs 21 through 58 above (among any other issues address in this pleading).
10
75. Pursuant to Fed. R. Civ. P. 23, Lead Plaintiffs, and the Class Members,
11
seek to prosecute their declaratory relief and common law claim as a class action on
12
behalf of all current and former LifeStance employees who were not compensated
13
appropriately for services performed as Clinicians for LifeStance.
14
76. A class action is appropriate in this circumstance because the Class
15
Members are similarly situated in that they were subjected to LifeStance’s unlawful
16
employment practices while performing services on LifeStance’s behalf, such as
17
providing treatment to children, adolescents, and adults suffering from a variety of
18
mental health issues and increasing profits for the benefit of LifeStance through their
19
activities.
20

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77. Lead Plaintiffs and putative class members were non-exempt
1
employees for the applicable periods and were issued W2s by LifeStance.
2
78. The class of similarly situated individuals or potential Class Members
3
sought to be certified pursuant to Fed. R. Civ. Pro. 23 is defined in above.
4
79. Based on preliminary investigation, members of the class action can be
5
placed into three separate subclasses:
6
a. Individuals classified by LifeStance as a licensed therapist
7
or psychologist.
8
b. Individuals classified by LifeStance as a licensed
9
psychiatric nurse practitioner.
10
c. Individuals classified by LifeStance as a licensed clinical
11
social worker.
12
80. The precise size and identity of the entire class is ascertainable from
13
LifeStance’s business records, tax records, and/or employee personnel records,
14
including its website (https://lifestance.com), which provides the name of all
15
Clinicians purportedly “currently employed” by LifeStance.
16
17

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A. Numerosity of the Class.
1
81. Class Members are so numerous that their individual joinder is
2
impracticable.
3
82. Although the precise identities, numbers and addresses of all Class
4
Members are currently unknown to Lead Plaintiffs, the facts on which the
5
calculation of that number can be based are presently within the sole control of
6
LifeStance.
7
83. Upon information and belief, there are three hundred and fifty (350) or
8
more potential members of the class action during the Class Period.
9
B. Existence of Common Questions of Fact and Law.
10
84. There is well-defined commonality in the questions of law and fact
11
involved affecting Class Members. The common questions of law include, but are
12
not limited to:
13
a. Whether LifeStance employed Class Members within the
14
meaning and classifications as prescribed by law.
15
b. What proof of hours worked is sufficient where employers fail in
16
their duty to maintain time records.
17
c. Whether LifeStance failed and/or refused to pay Class Members
18
for services performed for the direct benefit of LifeStance.
19

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d. Whether LifeStance failed and/or refused to compensate Class
1
Members for all hours worked and benefits conferred to LifeStance.
2
e. The misclassification and/or appropriate classification of the
3
Class Members.
4
f. Whether the loan disguised as a wage advance is unconstitutional
5
since it creates indentured servitude in violation of the 13th
Amendment of the
6
United States Constitution.
7
g. Whether LifeStance’s efforts to reclaim wages vis-à-vis calling
8
them an advance is lawful and enforceable.
9
h. Whether LifeStance must repay any portions of the so-called
10
advance that it has collected from its employees.
11
i. Whether LifeStance acted with intention—willfully and
12
maliciously—in its actions; and
13
j. Whether LifeStance is liable for all damages claimed hereunder,
14
including but not limited to compensatory, liquidated, interest, costs and
15
disbursements, and attorneys’ fees.
16
17

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C. Typicality of the Class.
1
85. Lead Plaintiffs’ claims are typical of the claims of all Class Members
2
because they were employed in the same capacity during the Class Period; Lead
3
Plaintiffs experienced the same harms and violations of law as all other Class
4
Members.
5
86. Additionally, all claims arise from the same conduct and factual basis
6
including LifeStance’s historical ruthless, impious, and predatory compensation
7
practices, as described above.
8
D. Adequacy of the Class Representatives and Counsel.
9
87. Lead Plaintiffs are adequate representatives of Class Members because
10
their interests do not conflict with the interests of the other Class Members they seek
11
to represent.
12
88. Lead Plaintiffs have retained competent trial counsel for this class
13
action and intend to vigorously pursue this action.
14
89. Lead Plaintiffs and their trial counsel will fairly and adequately protect
15
the interests of Class Members.
16
17

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E. Predominance and Superiority.
1
90. A class action is superior to other available methods for the fair and
2
efficient adjudication of this litigation—particularly in the context of wage litigation
3
like the present action, where individual plaintiffs may lack the financial resources
4
to vigorously prosecute a lawsuit in federal court against LifeStance.
5
91. The individual members of the class do not have an interest in or
6
capacity to bring separate actions.
7
92. Lead Plaintiffs find it is desirable to concentrate the litigation into one
8
cohesive case.
9
93. There are no likely difficulties that will arise in managing the class
10
action.
11
94. This suit may be maintained as a class action under Federal Rule of
12
Civil Procedure 23(b)(3) because questions of fact and law common to the Class
13
Members predominate over the questions affecting only individual members of the
14
class; a class action is superior to other available means for the fair and efficient
15
adjudication of this action.
16
95. The damages suffered by individual Class Members may be
17
disproportionate to the burden and expense of complex litigation of these claims on
18
an individual basis.
19

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96. Additionally, individual litigation may lead to inconsistent and
1
conflicting judgments against LifeStance; therefore, effective redress for every Class
2
Member may be limited or impossible.
3
97. A class action which involves all Class Members favors judicial
4
economy, fairness, and provides the benefit of a single, consistent, adjudication on
5
the issues herein claimed.
6
98. Lead Plaintiffs maintain the right to modify the class and or create
7
additional subclasses or classes, if necessary, and to revise these definitions to
8
maintain cohesive classes which do not require individual inquiry to determine
9
liability.
10
VII. BASIC CONDITIONS PRECEDENT ALLEGATIONS
11
99. Lead Plaintiffs have engaged the law firm of éclat law, PA to serve as
12
its lead trial counsel and are obligated to compensate these law firms for services
13
rendered in connection with prosecuting the Collective Members and Class
14
Members’ rights as alleged herein.
15
100. All conditions precedent to filing this lawsuit have occurred, have
16
expired, or have been effectively waived.
17
18

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COUNT I: FAIR LABOR STANDARDS ACT
1
2
101. The Lead Plaintiffs reallege and incorporate by reference the
3
allegations contained in paragraphs 1 through 73 99 and 100 as if fully set forth
4
herein.
5
102. This is a cause of action for unpaid wages and damages under the Fair
6
Labor Standards Act, 29 U.S.C. § 201, et. seq.
7
103. LifeStance was or continues to be the employer of all Clinicians, the
8
individuals that would comprise the members of the collective action within the
9
meaning of FLSA 29 U.S.C. §203(d).
10
104. Clinicians (the individuals that would comprise the members of the
11
collective action) were or continue to be “employees” of LifeStance within the
12
meaning of FLSA, 29 U.S.C. § 203.
13
105. Although the Plaintiffs are medical professionals (however, they are not
14
doctors), they were W2 employees that literally received no income for several
15
weeks out of the year for the service they provided to patients on LifeStance’s behalf,
16
including without limitations the constraints on receiving compensation articulated
17
in paragraphs 20 through 57.
18
106. The Clinicians were hired by LifeStance to perform duties on behalf of
19
and for the benefit of LifeStance consistent with its overall business platform and
20
objectives as described generally in paragraphs 21 through 58 above.
21

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107. By failing to pay the Clinicians (the individuals that will comprise the
1
members of the collective action) minimum wages, overtime wages, failing to
2
outright pay complete wages free and clear as required by law, LifeStance has
3
violated Sections 206, 207, 215 and 216 of the FLSA, amongst other laws, and such
4
conduct was willful within the meaning of the FLSA.
5
108. LifeStance understood it had an affirmative obligation to pay the
6
Collective Members for all hours that they spent working for its benefit, yet it
7
intentionally and routinely failed to pay such compensation as described above.
8
109. LifeStance a culture of toxicity and a hostile work environment during,
9
after, and before the applicable period at issue, which included, but was not limited
10
to, the indentured servitude described previously in this pleading.
11
110. Instead of lawfully paying its employees, LifeStance established and
12
maintained systems, policies, and procedures that were intentionally designed to
13
avoid paying employees their earned wages as detailed in the paragraphs above.
14
111. LifeStance has engaged in a widespread systematic pattern, policy, and
15
practice of violating the FLSA, as detailed throughout this Complaint.
16
112. The Clinicians are entitled to be paid at least minimum wage for all
17
hours worked during the workweek pursuant to FLSA 29 U.S.C. § 206.
18

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113. LifeStance violated FLSA 29 U.S.C. § 206 by failing to pay the
1
Clinicians minimum wages for all hours worked, as described above, and caused the
2
Clinicians to suffer lost wages and interest thereon.
3
114. LifeStance knowingly and willfully carried out its illegal pattern or
4
practice of failing to pay proper wages as compensation.
5
115. As a result of LifeStance’s intentional, willful, and unlawful acts in
6
refusing to pay the Clinicians minimum wages, overtime wages, and wages in
7
general (i.e., no payment was made at all) for one or more workweeks during the
8
applicable Collective Period, the Clinicians have suffered damages, and incurred
9
reasonable attorneys’ fees and costs as provided in the FLSA.
10
116. As a result of LifeStance’s willful violation of FLSA § 206, 207, 215,
11
and 2016 the Clinicians are entitled to recover the full amount of any unpaid back
12
wages unlawfully withheld, and any damages experienced due to LifeStance’s
13
retaliatory acts and liquidated damages as per 29 U.S.C. § 216 and other provisions
14
within the FLSA statute.
15
117. The Clinicians are entitled to recover from LifeStance their unpaid
16
minimum wages/overtime wages, damages for unreasonably delayed payment of
17
wages, and any damages experienced due to LifeStance’s retaliatory acts, liquidated
18
damages or pre-judgment interests, reasonable attorneys’ fees, and costs and
19
disbursements pursuant to the FLSA statute.
20

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118. Because LifeStance’s violations of the FLSA have been willful, a three-
1
year statute of limitations applies pursuant to 29 U.S.C. § 255.
2
COUNT II - FAIR LABOR STANDARDS ACT – KICK BACKS
3
4
119. The Lead Plaintiffs reallege and incorporate by reference the
5
allegations contained in paragraphs 1 through 73, 99 and 100 as if fully set forth
6
herein.
7
120. Pursuant to 29 C.F.R. § 531.35, wages cannot be considered to have
8
been paid by the employer to the employee unless they are paid finally and
9
unconditionally or “free and clear.”
10
121. Further, wage requirements will not be met where the employee is
11
required to “kicks-back” directly or indirectly to the employer or to another person
12
for the employer’s benefit the whole or part of the wages delivered to the employee.
13
122. Kickbacks include but are not limited to direct reductions in employee’s
14
pay checks for the benefit of the employer, amongst other things.
15
123. LifeStance routinely and systematically made illegal deductions to the
16
Clinician’s pay without reason or description—a benefit kicked-back directly to
17
LifeStance as described in paragraphs 21 through 58 above.
18

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124. Thus, Clinicians were routinely forced to kick-back their wages to
1
LifeStance, which consequently benefitted the employer to the detriment of the
2
employee.
3
125. LifeStance’s erratic and unlawful deductions of the Clinician’s earned
4
wages resulted in its willful violation of 29 C.F.R. § 531.35 as the Collective
5
Members’ pay was not provided “free and clear” of other conditions as described
6
with particularity throughout paragraphs 21 through 58 above.
7
126. As stated earlier, wages were paid and conditioned upon repayment of
8
a “loan” to W2 employees that must be paid back to the employer in full without
9
exception, and LifeStance would seek to reclaim these dollars advance if the
10
Clinician left the company prior to paying back the indenture in full.
11
127. Such deductions at many times during their tenure with LifeStance
12
caused Clinicians to earn $0 for work conducted or, less than $450.00 in a given
13
week.
14
128. As a direct and proximate result of the kickbacks described throughout
15
this Complaint, the Clinicians were damaged because they did not enjoy the earned
16
benefit of their whole paycheck, without any kickbacks to LifeStance.
17
18

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COUNT III: DECLARATORY RELIEF
1
129. Lead Plaintiffs reallege and incorporate by reference the allegations
2
contained in paragraphs 1 through 58, and 74 through 100 as if fully set forth herein.
3
130. This is a claim against LifeStance to the federal Declaratory Judgment
4
Act, 28 USC §2201(a), seeking a declaration that:
5
a. The advance that LifeStance uses to create indentured
6
servitude is a violation of the 13th
Amendment to the United States
7
Constitution, thereby making it an illegal and unenforceable obligation.
8
b. LifeStance cannot take any further action to seek to collect
9
on its indenture as such action is unconstitutional and thus
10
unenforceable.
11
c. LifeStance must repay all Clinicians whatever portion of
12
the indenture it has collected from them as of the date of the entry of
13
final judgment in this action.
14
131. The parties are in dispute as to the validity and enforceability of
15
LifeStance’s unconscionable, predatory, and unconstitutional compensation
16
policies, procedures, and agreements including its creation of indentured servitude
17
wherein it expects its employees to repay all wages “advanced” to them during their
18
first six to twelve months of employment.
19

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132. While it appears that LifeStance may recognize that its scheme to
1
recover wages and other compensation earned by its Clinicians is unethical,
2
unlawful, and perhaps ruthless and predatory, LifeStance nonetheless continues to
3
create these unconstitutional obligations and continues to seek to enforce them by
4
engaging in aggressive tactics against the Clinicians to collect the money, including
5
those articulated specifically in paragraphs 37 through 58.
6
133. LifeStance has threatened legal action against Lead Plaintiffs and other
7
Clinicians for nonpayment of this indenture, which Lead Plaintiffs and all Clinicians
8
contend is unconstitutional as it violates the 13th
Amendment to the United States
9
Constitution, among other laws, and public policy of protecting Americans against
10
slavery in any form.
11
134. Lead Plaintiffs and all Clinicians affirmatively assert that LifeStance’s
12
attempt to reclaim (or keep) wages that the Clinician have lawfully eared is not valid,
13
binding, or enforceable – this proscribed conduct is unconscionable,
14
unconstitutional, against public, and therefore should not be enforce as a matter of
15
law.
16
135. An actual controversy exists as to the rights and obligations of the
17
respective parties.
18
136. LifeStance illegally reclaims and takes wages that it pays to its
19
Clinicians by calling them “an advance” in its Machiavellian attempt to create the
20

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illusion that it is paying its employees the competitive salary that it agreed to pay
1
them when they accepted employment with LifeStance, while at the same time
2
creating an artifice by which they can take a significant portion of those wages back
3
from the employee, together with interest accruing on a monthly basis.
4
137. LifeStance is of the opinion that its behavior is lawful, and thus it
5
continues to require Clinicians repay the advance under the guise that the corporation
6
has the right to require an indenture as a condition of employment, although this
7
indenture does not apply to senior management at LifeStance, none of whom are a
8
Clinician or an individual that generates an income for the corporation.
9
10

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1
2

of 47
138. As previously mentioned, Lead Plaintiffs and Clinicians, on the other
1
hand, contend that the indenture referred to as an advance is unlawful,
2
unconstitutional and engenders the ancient practice of indentured servitude for
3
Clinicians, which has long since been banned in the United States vis-à-vis the 13th
4
Amendment to the United States Constitution.
5
139. The provisions are clearly against public policy as it is certainly against
6
the public interest to allow a publicly traded company to avoid paying its employees.
7
It instead requires that its employees pay it (the company) for the time that the
8
employees performed work for the company.
9
140. In essence, there is no benefit provided to the employee whatsoever in
10
exchange for performing work on behalf of LifeStance.
11
141. LifeStance retains all the benefit of the significant revenue5
it has
12
received from the efforts of the Clinicians.
13
142. Lead Plaintiffs request that the Court intervene to interpret the provider
14
employment agreements and make affirmative findings to determine:
15
a. Whether the “claw back” or “advance” provisions of the contract
16
are void and unenforceable, eradicating the entire contract as
17
compensation provisions are a material term of the contract.
18
5
LifeStance’s reported gross revenue for calendar year appears to have
exceeded $580,000,000 based on its public filings with the SEC.

of 47
b. Whether the employment contract or corporate policies
1
regarding “Obligations Upon Termination” is void and unenforceable as it
2
relates to the repayment/reimbursement of the Incentives/Advance/Debt.
3
c. Whether the “Compensation” and “Advance on Compensation”
4
provisions of the contract (and accompanying schedule) are void and
5
unenforceable, eradicating the entire contract as compensation provisions
6
are a material term of the contract; and
7
d. Whether the contract between the parties created a valid, binding,
8
enforceable, and lawful monetary repayment obligation (debt) against
9
Plaintiffs and in favor of LifeStance.
10
103. Plaintiffs have no adequate remedy at law.
11
PRAYER FOR RELIEF
12
WHEREFORE, Class Members/Collective Action Members respectfully
13
request that judgment be entered in their favor and against LifeStance Health Group,
14
Inc., and:
15
1) Certification and acknowledgement of the Collective Action (Counts I-
16
II of this litigation) and appointment of the above-named Plaintiffs and their counsel
17
for the opportunity to represent the collective class action.
18

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2) Certification of this action (Counts III) as a Class Action pursuant to
1
Fed. R. Civ. P. 23(b)(2) and (3) on behalf of members of the Class and appointment
2
of the above-named Plaintiffs and their counsel to represent the class.
3
3) Awarding Class Members/Collective Action Members the relief sought
4
in each individual Count, including without limitation declaring that LifeStance’s
5
attempt to create indentured servitude is unconstitutional and thus unenforceable as
6
a matter of law, and entering an injunction to enjoin LifeStance from continuing to
7
engage in this unlawful conduct.
8
4) Awarding Class Members/Collective Action Members and the above-
9
named Plaintiffs liquidated damages to the full extent permissible under the law.
10
11
named Plaintiffs attorneys’ fees and costs pursuant to the applicable Federal laws.
12
13
named Plaintiffs punitive damages and/or pre-judgement interest pursuant to the
14
applicable Federal laws.
15
7) Granting Class Action Members an Order on an expedited basis,
16
allowing them to send notice of this action, pursuant to Fed. R. Civ. P. 23, to those
17
similarly situated.
18

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8) Granting Collective Action Members an Order, on an expedited basis,
1
allowing them to send notice of this action as a collective action pursuant to 29
2
U.S.C. § 216(b) to those similarly situated Collective Action Members.
3
9) Entry of a judgment declaring that the employment contract in its
4
entirety is void and unenforceable, including the eradication of the false debt that
5
LifeStance attempts to create through the employment contract, together with any
6
other remedy provided and applicable under law.
7
10) Any other relief this Court deems just and proper.
8
DEMAND FOR JURY TRIAL
9
Plaintiffs respectfully request a jury trial on all triable issues above.
10
11
12
//s// Jason P. Hoelscher
13
Jason P. Hoelscher, Arizona Bar No. 027580
14
Sico Hoelscher Harris, LLP
15
802 N. Carancahua Street, Ste 900
16
Corpus Christi, Texas 78401
17
Telephone: (361) 653-3300
18
teamhoelscher@shhlaw.com
19
20
Kevin K. Ross-Andino, pro hac vice forthcoming
21
éclat Law, PA
22
307 Cranes Roost Blvd., # 2010
23
Altamonte Springs, Florida 32710
24
Phone: (407) 636-7004
25
26
Lead trial counsel to the Lead Plaintiffs and each Class
27
Member/Collective Action Member
28

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23.6.22.Mcafee v LifeStance.Complaint.pdf